Citicorp, reducing price, revives sale of AMBAC.

Bloodied but unbowed, Citicorp has revamped terms for the sale of shares in its municipal-bonds insurance subsidiary just weeks after withdrawing the deal due to lack of investor interest.

Market sources said that Salomon Brothers could complete the sale of 17.6 million shares of AMBAC Indemnity Corp. as early as Thursday night, but the price will be lower than what the giant money-center bank was seeking a few weeks ago.

"It took a little bit of time to figure out just what price people are willing to pay," said one capital markets specialist.

Indications are that the shares will be sold at a price of just $20 to $21 each, raising a total of just $352 to $370 million. That is well below the $395 million to $465 million discussed in June. After the offering, Citicorp will own just under 50% of AMBAC.

A Citicorp spokeswoman declined to comment on the offering. A Salomon Brothers official also declined to comment other than to confirm that AMBAC is back on the market.

The nation's largest bank reported total capital equal to 7.5% of risk-weighted assets, below the standards that take effect at the end of 1992. The sale is expected to bring Citicorp into line with those standards.

Because Citicorp delayed the sale over the end of the second quarter, the bank will have to wait another three months before showing the effect of the sale in its financial statements.

Pricing the AMBAC sale was complicated by the poor performance of AMBAC's closest competitor, MBIA. MBIA Inc. saw its stock price drop from $34.625 at the end of May to $30.625 Tuesday. It was trading Wednesday at $29.875. The weakness of that stock likely made some investors leery of paying too much for AMBAC.

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